Bailey & Beatty Financial Services

Phone: 203-743-5040 e-mail: [email protected] www.baileybeatty.com

Manulife College Savings

The Multi-Managed Way to Save For College

College Savings Planning

Paul & Bo Beatty June 2 nd , 2003

Securities and Advisory Services offered through Commonwealth Financial Network, Member NASD, SIPC, a Registered Investment Advisor

Although many of the topics presented may also involve tax, legal, accounting, or other issues, neither The Manufacturers Life Insurance Company (U.S.A.), Manulife Financial Securities LLC nor any of its agents, employees, or registered representatives, are in the business of offering such advice. Individuals interested in these topics should consult with their own professional advisors to examine tax, legal, accounting, or financial aspects of these topics.

Manulife College Savings The Multi-Managed Way to Save For College

Bailey & Beatty Financial Services

Phone: 203-743-5040 e-mail: [email protected] www.baileybeatty.com

Price Tag for a College Education

Projected Cost for a Four-Year College Education

$250,000 Private Public $200,000 $150,000 $100,000 $50,000 $0 2002 2020

Source: Trends in College Pricing, The College Board, 2001.

Average costs included 4 years of tuition and fees as well as room and board for the 2001-2002 school year. Projected costs assume a 5% inflation rate per year.

Manulife College Savings The Multi-Managed Way to Save For College

Bailey & Beatty Financial Services Agenda

 What savings options are available?

 Benefits of 529 savings plans  Manulife College Savings  Getting started

Phone: 203-743-5040 e-mail: [email protected] www.baileybeatty.com

Manulife College Savings The Multi-Managed Way to Save For College

Bailey & Beatty Financial Services 529 Savings Plans

Phone: 203-743-5040 e-mail: [email protected] www.baileybeatty.com

 College Savings Plans – – – – Cover tuition and certain other expenses including room and board Plan assets may be used for any eligible educational institution Assets generally invested in portfolios holding mutual funds Offer different investment options Manulife College Savings The Multi-Managed Way to Save For College

Bailey & Beatty Financial Services

Phone: 203-743-5040 e-mail: [email protected] www.baileybeatty.com

529 Savings Plan Benefits

   Any earnings are tax-deferred Qualified withdrawals are federal income tax free* Account Holder maintains control – Qualified or non-qualified withdrawals – – Ability to change beneficiaries Portable benefits *Tax provisions allowing for federal income tax-free withdrawals for qualified expenses will expire 12/31/10 unless extended. State tax laws and treatment will vary. If your state offers a plan you may want to consider what, if any, potential state income tax benefits it may offer. Non-qualified distributions of earnings will be subject to income tax and a 10% federal penalty tax. Please consult your financial consultant for more information.

Manulife College Savings The Multi-Managed Way to Save For College

Bailey & Beatty Financial Services

Phone: 203-743-5040 e-mail: [email protected] www.baileybeatty.com

529 Savings Plan Benefits

 No income limitations  No age limitations  Choice of portfolios – – – Based on time horizon of when the student will enroll in college Allocation based on risk tolerance Individual fund options Manulife College Savings The Multi-Managed Way to Save For College

Bailey & Beatty Financial Services

Phone: 203-743-5040 e-mail: [email protected] www.baileybeatty.com

The Power of Gifting

 Estate and gift tax benefits – Five years worth of gifting in one year* – Allows $55,000 to be gifted in one year by an individual or $110,000 if married filing jointly – Money is removed from donor’s estate – Account Holder maintains control *If donor elects that the gift be treated as having accrued over a five-year period, donor may make single gift of up to $55,000 without triggering a gift tax. If additional gifts are made to the same beneficiary during this five-year period, a gift tax may apply.

Manulife College Savings The Multi-Managed Way to Save For College

Bailey & Beatty Financial Services

Phone: 203-743-5040 e-mail: [email protected] www.baileybeatty.com

Generational Gifting

Son & Wife $5,000,000 taxable estate: Grandpa & Grandma Daughter & Husband Son & Wife Child $110K Child $110K Child $110K Child $110K Child $110K Child $110K Child $110K Child $110K

Grandparents: Remove $880,000 from estate Each child has an account starting with $110,000!

*Donor must elect that the gift be treated as accruing over a five-year period. If additional gifts are made to the same beneficiary during this five-year period, a gift tax may apply.

Manulife College Savings The Multi-Managed Way to Save For College

Bailey & Beatty Financial Services

Phone: 203-743-5040 e-mail: [email protected] www.baileybeatty.com

A Gift from Uncle Sam

 Investing in a 529 is better – – – – Qualified withdrawals are federal income tax free* Ability to do a tax free transfer from one plan to another without changing beneficiaries Members of the family now include first cousins of the beneficiary Room and board allowances increased for off-campus living *Tax provisions allowing for federal income tax-free withdrawals for qualified expenses will expire 12/31/10 unless extended. State tax laws and treatment will vary. If your state offers a plan you may want to consider what, if any, potential state income tax benefits it may offer. Non-qualified distributions of earnings will be subject to income tax and a 10% federal penalty tax. Please consult your financial consultant for more information.

Manulife College Savings The Multi-Managed Way to Save For College

Bailey & Beatty Financial Services

Phone: 203-743-5040 e-mail: [email protected] www.baileybeatty.com

Educational Savings Vehicles

529 Savings Plans Tax Deferral Maximum Annual Contribution Income Qualification Yes Up to $250,000 Lifetime Plan Limit depending on plan None UGMA/ UTMA No None None Coverdell Education Savings Account Yes, tax free if used for qualified expenses $2,000 annually Taxable Accounts No None AGI Limits Apply None

*$110,000 can be contributed per beneficiary (married filing jointly) within a 5 year period without triggering gift taxes.

Manulife College Savings The Multi-Managed Way to Save For College

Bailey & Beatty Financial Services

Phone: 203-743-5040 e-mail: [email protected] www.baileybeatty.com

Educational Savings Vehicles

Control of Withdrawals Ability to Change Beneficiary Estate Planning Benefits 529 Savings Plans Account Holder UGMA/UTMA Coverdell Education Savings Accounts Taxable Accounts Custodian, until child reaches age of majority (Can vary by state) Account Owner Account Owner Yes No Yes Not Applicable Assets are transferred out of the estate Assets are transferred out of the estate Assets are transferred out of the estate Assets remain part of the estate

Manulife College Savings The Multi-Managed Way to Save For College

Bailey & Beatty Financial Services

Phone: 203-743-5040 e-mail: [email protected] www.baileybeatty.com

Manulife College Savings

The Multi-Managed Way to Save For College What will your legacy be?

Bailey & Beatty Financial Services is here to help you plan and implement your College Savings.